Retailers and customers frequently inquire about whether Iowa applies sales tax on online purchases. The sale of tangible personal property and some services is typically subject to sales tax. It is getting harder and harder to tell which sales are liable to sales tax as more people shop online.
Sales tax is levied in Iowa on the sale of tangible personal property, which includes things like electronics, furniture, and apparel. On the other hand, the state does not charge sales tax on the purchase of some services. For instance, in Iowa, services like healthcare and education are not subject to sales tax.
In South Dakota v. Wayfair, which was heard in 2018, the Supreme Court of the United States found that states could force online retailers to collect and remit sales tax even if they had no physical presence there. Iowa began forcing online merchants to gather and send sales tax on internet purchases in January 2019 as a result. Therefore, you will have to pay sales tax on any taxable items you buy online from a retailer with a physical location in Iowa. Which States Do Not Require Online Sales Tax Collection?
Online purchases are exempt from sales tax in some states. Alaska, Delaware, Montana, New Hampshire, and Oregon are some of these states. It is crucial to keep in mind that some towns and counties in these states may still charge local sales taxes on particular goods. What in Iowa is not subject to sales tax?
As was already mentioned, Iowa exempts several services from the sales tax. These consist of professional services like accountancy and law as well as medical and educational services. In Iowa, some items are also excluded from paying sales tax. Food, prescription medications, and medical supplies are a few of these. Is Iowa levied a shipping tax?
In Iowa, the cost of shipping is typically regarded as a component of the item’s selling price. Therefore, the cost of shipment is taxed as well if the object being transported is taxable. However, the price of shipping is not subject to sales tax if the item being shipped is exempt from it.
One of the biggest internet retailers in the world is Amazon. 2019 January 1 marked the start of Amazon’s sales tax collection and payment processes for transactions made by Iowa residents. Therefore, you must pay sales tax on your purchase if you order taxable items from Amazon and have them delivered to Iowa.
In summary, Iowa does indeed charge sales tax for online purchases. The law mandates that online merchants gather and send sales tax on purchases made by residents of Iowa. The cost of shipping is typically seen as a portion of the sales price of the item being shipped, but some goods and services are exempt from sales tax in Iowa. When making online purchases, it is crucial to determine whether sales tax is necessary.